Nonbudgeted

Nonbudgeted is a term used in finance and accounting to describe expenses or revenues that fall outside the approved budget for a given period, organization, or project. Nonbudgeted items are not planned or authorized in the current budget and typically require additional approval, reallocation, or formal budget amendments to be recognized and funded.

Nonbudgeted costs can arise from emergencies, unplanned changes in costs or scope, legal settlements, regulatory fines, or one-off events such as natural disasters. Revenue that is not anticipated in the budget, such as extraordinary grants or settlements, can also be described as nonbudgeted. In practice, organizations distinguish between budgeted variances, which are monitored as part of ongoing budgeting, and nonbudgeted items, which usually prompt a formal change process.

Handling nonbudgeted items involves governance and control mechanisms. Common approaches include creating contingency reserves, conducting variance analysis, and issuing requests for budget amendments or supplemental appropriations. If a nonbudgeted item is approved, it may be funded through reallocations, reserves, or revised forecasts to reflect the new financial reality.

In budgeting practice, the existence of significant nonbudgeted items can indicate the need for improved planning, a more robust contingency framework, or more flexible forecasting. Clear documentation and a transparent approval path help maintain financial discipline while allowing timely responses to unforeseen developments. See also contingency planning, budget variance, and supplementary or off-budget allocations.